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Month: December 2014

Nearly every society and culture on Earth has a creation story passed down from generation to generation to explain who we are and how we got here. The video game industry is no different. While the details may change based on which sources have been consulted by which authors at which times, here is how the creation story of the video game industry might be rendered:

In the late 1960s, a bright young engineering student named Nolan Bushnell attended college at the University of Utah, home of one of the finest computer science programs in the United States. At Utah, Bushnell became fascinated with computers, learned how to program, and created a few of his own primitive games on the mainframes at the University. He also became enamored with Spacewar!, which the computer science students at the school were constantly playing. After blowing his entire college tuition fund in a high stakes poker game, Bushnell took a job at a local amusement park, where he was soon placed in charge of the coin-operated games. Bushnell realized right away that Spacewar! would make a perfect arcade game, but computers were simply too expensive at the time. Fast forward to California, 1969, when Bushnell learns about the new minicomputers out in the world. Bushnell initially believes this technology will now be cheap enough to recreate the game as a commercial product, but this proves not to be the case. He therefore decides to do the game entirely through hard-wired logic, using integrated circuits to build a system dedicated solely to playing the game. He enlists the help of a fellow engineer to build the power supply and monitor interface and other analog components while he creates the core of the game in his daughter’s bedroom. Released through a local company in 1971 as Computer Space, the game does poorly because the controls are too complicated. Bushnell realizes that he requires a simple concept to introduce video games, so he and a partner chip in $250 each to found a company called Atari and build that simple game idea, a table tennis game called Pong. Pong takes the world by storm as video games quickly displace pinball and all other forms of arcade amusement to launch a new industry.

The above makes for a good story. Unfortunately, much of it is simply not true.

Now I want to be clear on one point: Nolan Bushnell was a visionary. He saw the future of interactive entertainment before practically anyone else and was the first person to create a successful company based solely around video games. Indeed, while an interactive entertainment industry would have formed eventually without his intervention, it is probably fair to say — as Bushnell himself has claimed — that without his insight, it would have developed several years later and in a very different manner (yes, Magnavox released the Odyssey in 1972 independent of Bushnell, but that system had its own problems and console gaming did not take root until several years later after advances in large-scale integration). For demonstrating that a company could thrive solely through creating video games and for choosing to manufacture and market his own products rather than licensing them to a pinball, television, toy, or consumer electronics company, he deserves the title “father of the video game industry” and stands as one of the true titans in the field.

Unfortunately, Mr. Bushnell’s role in the creation of Atari, Computer Space, and Pong, has oft times been exaggerated, while there have also been attempts to alter the timeline of certain events to give Atari primacy over other companies and individuals working on similar technology in parallel. Over time, Bushnell has more readily credited those individuals who helped build Atari’s earliest games and has done much to set the record straight on many aspects of the company’s history, but some questionable material still remains in these accounts. Furthermore, as our understanding of the history has changed over the years, not every publication has kept up with new revelations, meaning that books and articles continue to be written today that parrot outdated and inaccurate information that should have long since disappeared. As with any undertaking that relies primarily on the memories of the individuals involved — most of the documents that could shed light on the period from 1965-1972 having long since vanished — the full truth may never really be known, but in this blog post and those that follow I hope to construct as accurate a picture as possible of the early life and influences of Nolan Bushnell, the birth of Atari, the launch of Pong, and the first halting steps into a new interactive entertainment industry.

Early Years

A teenage Nolan Bushnell (top row, third from right)

Nolan K. Bushnell was born on February 5, 1943. In a fitting twist considering how many facts surrounding Mr. Bushnell have become confused over the years, not even his place of birth is properly recorded. Most sources state that he was born in Clearfield, Utah, the hometown of his parents Clarence and Delma, but the birth announcement in the February 14, 1943, edition of the Ogden Standard clearly shows that he was actually born in nearby Ogden. Nolan became interested in science and electronics at an early age, crediting this interest in several interviews — including Robert Slater’s book of profiles on computer industry pioneers, Portraits in Silicon — to a third grade science assignment in which he had to teach a unit on electricity to the rest of the class. According to a profile by David Sheff in his book Game Over, Bushnell was also a dreamer from a young age, immersing himself in science fiction and imagining life on far off worlds. According to Sheff, Bushnell remembers building a mockup of a spaceship panel out of an orange crate when he was around six years old.

Both Sheff and Steven Kent in his Ultimate History of Video Games paint a portrait of a restless, creative young man of boundless energy and enthusiasm, a view readily supported by testimony from friends and co-workers over the years and indeed still evident when talking to him today. Sheff describes both Nolan’s electronics exploits — becoming a HAM radio operator at a young age — and his fondness for practical jokes — once staging a prank in which he drove up to a group of friends wearing a ski mask and fired two blank shotgun shells at one of them, who smashed some ketchup packets against his chest and pretended to be shot. He often combined these two interests as well, as both Sheff and Kent recount an incident where he attached a hundred-watt light bulb to a large kite and convinced the neighbors a UFO was hovering over Clearfield. In an interview with the Tech Museum of Innovation, Bushnell described his interest in rocketry and his time spent in a block house in his backyard building ignition systems. According to this interview, he once nearly set the family garage on fire when a liquid-fuel rocket mounted on a roller skate crashed into it. Thankfully, while the fuel canister cracked, the fuel was so volatile that it ignited in a flash and did no lasting damage.

Clearly, Nolan Bushnell knew how to have fun as a boy, but he also knew how to work. Born to Mormon parents — though he ultimately left their religion behind — he was raised on the importance of family and hard work. As Bushnell recounted to Sheff, in the summer of 1958 Clarence Bushnell, who worked as a cement contractor, died, and fifteen-year-old Nolan finished his father’s outstanding jobs himself. In speaking to Kent, Bushnell credited this experience with instilling a belief that he could do any task he set himself to. As he recounted in one of several depositions he gave during patent litigation with Magnavox, Bushnell also held a job with a local business called Barlow Furniture throughout high school in which he did appliance delivery and appliance and TV repair. He continued this job into his early college years as well.

As Bushnell’s early career has come under some scrutiny in recent years, some authors have come to doubt Bushnell’s claims that he was a TV repairman. The main source for this doubt is the recollections of Ted Dabney, co-founder of Atari, who believes this claim improbable based on his observations of Bushnell’s engineering skills and the difficulty involved in tinkering with 1950s televisions. While I am happy to note Dabney’s objection here, I personally give Bushnell the benefit of the doubt on this issue and am willing to believe he did, in fact, repair TVs and appliances in high school and college. He listed this job as part of his work experience in a sworn deposition given on January 13, 1976, and I can see no discernible advantage to lying about this under oath, as it is not a material fact upon which his defense hinged — unlike his University of Utah Spacewar! claims discussed below. Furthermore, in the same deposition, Bushnell claims he mainly “switched tubes around” and that other people did the “heavy repairing.” Finally, he states himself in the deposition that he was better with appliances than with televisions. Therefore, Dabney’s assessment does not necessarily contradict Bushnell, who never claimed under oath to be doing sophisticated TV repair work. On the other hand, in Gamers at Work Bushnell told Morgan Ramsay that he ran a television repair company as a teenager, while Scott Cohen in his history of Atari, Zap!, states that Bushnell ran a television-appliance-radio repair business. These accounts appear to be embellishments of his work at Barlow, as no independent repair operation is referenced in the 1976 deposition. Recently, Bushnell has also started claiming that he was running a TV repair business from the time he was ten years old (see, for example, his February 2013 interview at the Startup Grind conference), but again this appears to be embellishment. In his deposition, Bushnell does describe how he started by fixing neighborhood TVs before the Barlow job, but he never indicates that he had a business to do so and never indicates such a young, and highly improbable, age.

According to his 1976 deposition, Bushnell matriculated to Utah State University in 1961 to study engineering. When speaking to Kent, Bushnell described a paper he wrote during his freshman year in which he argued that a bright person should be able to master — that is be in the 90th percentile — any subject with three years of intensive study. Bushnell claimed that, based on this formulation, his goal was to constantly move from topic to topic, never focusing too long on any one area. This philosophy captures Bushnell perfectly. Growing up, he flitted between science fair projects, debate team, and basketball (having reached his final height of 6’4” by the seventh grade, but according to Cohen never achieving the coordination necessary to do much more than ride the bench) while reading philosophy as a hobby. According to his deposition, after high school Bushnell started at Utah State in engineering, switched to business, transferred to the University of Utah to major in economics in 1965, and finally graduated with an electrical engineering degree with a focus on computer design in December 1968. His entire professional life has been typified by moving from one new idea to the next while rarely sticking with one concept for too long. While this restless energy proved essential to establishing Atari and dreaming up some of the first commercial video games, however, it has also prevented him from effectively managing or sustaining a viable company in the long term. Bushnell has always been better at formulating ideas than at executing them.

There is a story about Nolan Bushnell’s college years that goes back at least as far as Zap! in 1984 and has been more recently parroted by Sheff, Kent, and Tristan Donovan in Replay that Nolan Bushnell blew his tuition money in a high stakes poker game, forcing him to take a job at a local amusement park to make ends meet. While it would not surprise me to learn that Bushnell played high stakes poker — his life is full of evidence of both his devout love of games and his penchant for risk taking — I believe this to be another embellishment. In truth, Bushnell worked throughout high school and college. According to his 1976 deposition, in addition to the Barlow Furniture delivery/repair job he worked for Litton Guidance Systems in the summer of 1962, served as a draftsman for a professor in the Utah State industrial engineering department planning irrigation systems in the Fall of 1962 or 1963, and also worked during the school year at Hadley Clothing. Both his deposition and his interview with Ramsay reference an advertising business he ran for a time in college as well. As Bushnell told Slater, he called this business the Campus Company and produced a blotter three times a year that he distributed free to four local universities. Included within was the calendar of events for the university, surrounded by advertising. Bushnell made his money — a claimed $3,000 per issue — by selling the advertising space. With a production cost of only $500, the blotter delivered Bushnell a tidy profit. In Slater’s book, Bushnell states he took the job at the amusement park to occupy his spare hours because he was afraid he would fritter away his earnings from the blotter if he did not have some other activity to keep him occupied. Perhaps he came to this realization due to losing at (or fearing to lose at) poker, but in Slater’s book he emphasizes a fear that he would spend the money, not gamble it away. In short, the sum of the evidence indicates that Bushnell needed to work his way through school regardless of his extracurricular activities and that it is highly unlikely he blew all his money gambling at any point. There is no question, however, that in the Summer of 1963, Nolan Bushnell began working at the Lagoon Amusement Park in Farmingham, Utah.

In many interviews, Bushnell has expressed the importance of his years at Lagoon, which have alternately been reported as two years (Cohen) or four years (Steven Bloom’s Video Invaders), but were in fact five years, as Bushnell himself related in his deposition. According to his testimony, Bushnell began his employment on the midway running a “spill the milk” game in which patrons tried to knock over milk bottles with a baseball. He subsequently rotated through several games including the “guess your weight” booth, “shooting waters,” “flip ’em over,” and coin-operated bowling and skee ball lanes. Working full time in the peak summer months and part time during the school year, Bushnell honed his sales skills as a carnival barker enticing visitors to spend their coins on his games. Bushnell has often been described as a natural showman, and he must have done well at this job, because in 1965 he became the manager for the amusement park penny arcade, sharing full profit and loss responsibilities for the division with a man named Steve Hyde while also taking responsibility for the maintenance of the equipment. He also claims in his deposition that he would take discarded arcade equipment off of Lagoon’s hands, repair it, and operate a coin-op route encompassing several University of Utah fraternity houses. He sold this route when he headed west after graduation to secure an engineering job in California. According to a 1982 profile printed in TWA Magazine as well as both Cohen’s and Slater’s books, Bushnell had hoped to work for Disney as an Imagineer — one of those engineers responsible for creating the rides and attractions at Disney theme parks — but the company did not hire fresh graduates. He therefore secured a job at tape recording pioneer Ampex Corporation.

Inspiration

Bruce Baumgart, winner of the Intergalactic Spacewar! Olympics, celebrates next to a terminal running Spacewar! at the Stanford AI Lab, where Nolan Bushnell first saw the game in 1969

Birthplace mixups, poker exploits, and TV repair questions aside, Nolan Bushnell’s early years do not engender controversy. Bushnell’s story gets much more complicated, however, when we approach the question of when and where he discovered the inspiration for Computer Space, the video arcade game he built with Ted Dabney (and which will be covered in more detail in a subsequent post). Now, there is no doubt that Computer Space and, by extension, the entire video arcade game industry was Bushnell’s idea (there was one other video arcade game concept active at roughly the same time, but it never entered mass production). There is also no doubt that Bushnell drew inspiration for the game from Spacewar!, a fact he has readily acknowledged in every interview he has ever given on the subject. Clearly, the combination of Bushnell’s experience as an operator of arcade games combined with his interest in Spacewar! and his entrepreneurial spirit provided the unique mix of ingredients required to introduce interactive entertainment to the general public. All of this has been claimed by Bushnell and his biographers, and rightly so. The problem arises from Bushnell’s claim — originally stated in a November 1973 article in Systems Engineering Today and subsequently parroted by every writer from Cohen to Sheff to Kent to Donovan — that he first saw Spacewar! in the late sixties at the University of Utah. In reality, this appears not to have been the case.

The best accounting of Bushnell’s exposure to Spacewar! comes from research collected by Marty Goldberg and Curt Vendel as part of writing their history, Atari, Inc.: Business is Fun. Basically, the question comes down to whether Spacewar! could have been played at the University of Utah between 1965 and 1968. In a blog post on the subject, Goldberg revealed his research, which involved actually contacting the university and working with a graduate student to go through the records of the nascent computer science department. In so doing, Goldberg noted that Utah never had a PDP-1, the original platform for Spacewar!, and that the only two computers theoretically capable of playing the game at the university during the relevant time frame, a PDP-8 and a UNIVAC 1108, were dedicated to highly specific functions and unlikely to be platforms for the game. Furthermore, the 1108 was equipped with a raster rather than a vector display, making it unsuitable for playing Spacewar!, while all evidence collected by Goldberg points to the PDP-8 version of the game being written after 1968.

Now, it is true that in his 1976 deposition in the Magnavox lawsuit, Nolan Bushnell did claim under oath that he had played Spacewar! at Utah, believing this to have occurred shortly after he arrived at the University in 1965 when a friend in the chess club invited him over to the computer center. When pressed for details, however, he could not recollect the exact time frame this occurred or even be certain of his friend’s name, first claiming it as Jim Davies and then claiming not to really remember the last name, but fairly certain it started with a “D.” He also could not remember if it was played on an IBM 7094 or a UNIVAC 1108 because Utah changed computers while he was there. This last claim actually demonstrates some familiarity with the Utah computer center, as Goldberg’s research did show that in 1966, Utah upgraded from an IBM 7044 (not 94) to an 1108. Bushnell then goes on to claim that a year or so later he became interested in programming some games and talked to a fraternity brother affiliated with the lab, one Randall Willey, who directed him to a student he could not recall the name of that gave him a printout of the Spacewar! code. When talking to Kent years later, Bushnell claimed that he subsequently programmed a few games — including a fox and geese game in which a player-controlled fox attempted to hunt down computer-controlled geese one by one without getting boxed in by them — but in his deposition he makes it clear that while he did take two computer courses and learned some FORTRAN and Algol, two early programming languages, he ultimately did not program any games at Utah himself. Furthermore, in his 1976 deposition he not only explicitly states that he was not interested in any games being played at Utah other than Spacewar!, but also that the “fox and geese” concept was actually something he recalled seeing at a computer conference circa 1969 as opposed to something he created himself. The closest he comes to claiming any game design at the university in his deposition is purportedly authoring a paper in 1967 outlining how certain game concepts, like baseball, might be implemented on a computer with a display. Once again, however, he was unable to provide any documentation or corroboration for this claim.

Why would Bushnell potentially be evasive under oath? Well, in April 1974 Atari was one of several companies sued over patents filed by Ralph Baer on early video game technology. Baer’s work, his patents, and this lawsuit will be discussed in more detail later, but for now its just important to know that Baer’s patents were filed in 1971, so one defense that Atari and other companies attempted to mount was that prior art existed that invalidated these patents. It was therefore important for Bushnell to establish that his own game technology had its roots in the mid 1960s, before Baer built his video game hardware. By placing his own knowledge of Spacewar! around 1965 and claiming to have written down some computer game ideas in 1967, Bushnell accomplishes just that. In addition to Goldberg’s research on the Utah computer center, I find it compelling that in his testimony Bushnell was as vague as possible regarding the people and technologies involved in the game he claimed to play in 1965, and that after the lawyers asked him to find material that could corroborate his assertions, he reported in a follow up deposition on March 2, 1976, (excerpted in Goldberg’s post) that he was unable to locate anyone or anything that could substantiate his story.

So when did Nolan Bushnell first see the Spacewar! game? According to my own interview with Bushnell, when he relocated to the San Francisco area, he began attending several go clubs, as he had recently become fascinated by the game in his later years at the University of Utah. At the Stanford University go club, Bushnell met Jim Stein, who worked at the Artificial Intelligence Laboratory. In both our interview and the book High Score, Bushnell recounted how one day in 1969 Stein told him about the cool games available at the lab, where as we saw previously, Spacewar! was an incredibly popular pastime. Bushnell states that he told his friend that he already knew of Spacewar!, but would love to play it again. Note how this recollection so closely mirrors the story in his deposition that a friend with the first name Jim with whom he played chess told him about all the cool games in the Utah computer center. I believe there is a high degree of likelihood that Bushnell took the true story of how he was introduced to the game at Stanford and tweaked it to take place earlier at Utah instead in order to show that his ideas predated those of Ralph Baer. This is the same basic conclusion drawn by Goldberg in his blog post, where as a final piece of evidence he presented an excerpt from a 1973 documentary, filmed before the Systems Engineering Today article and the Magnavox litigation, in which Bushnell claims as his inspiration the computer games played at Stanford and does not mention games at the University of Utah at all. In a later section of the documentary not available in Goldberg’s blog post, the narrator explicitly states that Bushnell first saw Spacewar! at Stanford.

So where does that leave the first portion of our video game creation story now? Well, I believe it goes something like this:

In 1969, a bright, enthusiastic engineering graduate from the University of Utah named Nolan Bushnell came to the state of California to work for Ampex Corporation. Possessed of an entrepreneurial spirit and experience working as an operator of arcade games, Bushnell was introduced to the landmark computer game Spacewar! by a friend who worked at the Stanford AI lab, became instantly hooked by the game, and pondered how to turn it into a commercial product. When he saw a sales flyer for the $3,995 Data General Nova, he thought he just might be able to run Spacewar! on a minicomputer hooked up to a brace of monitors and some coin slots and turn a profit. Bushnell therefore recruited some co-workers and took his first steps toward establishing a new industry, one that has grown to be worth over $50 billion today.

Thus begins the story of Nolan Bushnell, father of the video game industry.

While IBM was crushing its competition in the mainframe space, another computer market began opening up that IBM virtually ignored. Following the success of the PDP-1, Ken Olsen and his Digital Equipment Corporation (DEC) continued their work in real-time computing and cultivated a new market for computerized control systems for scientific and engineering projects. After stumbling in its attempts to build larger systems in the IBM mold, the company decided to create machines even smaller and cheaper than low-end mainframes like the 1401 and H200. These so-called “minicomputers” could not hope to compete with mainframe systems on power and were often more difficult to program due to a comparably limited memory, but DEC’s new line of computers were also far cheaper and more interactive than any system on the market and opened up computer use to a larger swath of the population than ever before. Building on these advances, by the end of the 1960s a DEC competitor established by a disgruntled former employee was able to introduce a minicomputer that in its most basic configuration cost just under $4,000, bringing computers tantalizingly close to a mass-market product. The combination of lower prices and real-time operation offered by the minicomputer provided the final key element necessary to introduce computer entertainment programs like Spacewar! to the general public.

Note: Once again we have a historical interlude post discussing the technological breakthroughs in computing in the 1960s that culminated in the birth of the electronic entertainment industry. The material in this section is largely drawn from Computer: A History of the Information Machine by Martin Campbell-Kelly and William Aspray, A History of Modern Computing by Paul Ceruzzi, The Ultimate Entrepreneur: The Story of Ken Olsen and Digital Equipment Corporation by Glenn Rifkin and George Harrar, and oral histories conducted by the Computer History Museum with Gordon Bell, Ed de Castro, Alan Kotok, and Harlan Anderson.

The Matrix

Ken Olsen poses outside The Mill, DEC corporate headquarters

When last we left DEC, the company had just introduced its first computer, the PDP-1, to a favorable response. Buoyed by continuing demand for system modules and test equipment and the success of the PDP-1, DEC’s profits rose to $807,000 on sales of $6.5 million for the 1962 fiscal year. Growing financial success, however, could not compensate for serious underlying structural problems at the company. From his time serving as a liaison between Project Whirlwind and IBM, Ken Olsen had inherited an extreme loathing for bureaucracy and the trappings of corporate culture and preferred to encourage individual initiative and experimentation more in line with practices in the academic sector. This atmosphere suited most of DEC’s employees, many of them transplants from MIT and Lincoln Labs eager — like Olsen — to continue their academic work in a private setting. DEC headquarters, affectionately called “The Mill,” practically became an extension of the MIT campus as students traveled back and forth between Cambridge and Maynard to work part time or just hang out with DEC engineers and learn how the company’s computers operated. There were no set engineering teams, so employees would organically form groups around specific projects. While this freedom and lack of oversight spurred creative thinking, however, it left DEC without a coherent product strategy or well developed sales, manufacturing, and servicing organizations.

In 1963, DEC revenues soared to $10 million, while profits jumped to $1.2 million. The next year, however, revenues flattened and earnings declined, coming in at $11 million and $900,000 respectively. With little management guidance, DEC engineering teams tended to over commit and under deliver on products, while lack of communication between sales, order processing, and manufacturing resulted in difficulties delivering the company’s existing product line to customers in sufficient quantities. Clearly, DEC needed to implement a more rigorous corporate structure to remain viable. The struggle to reform DEC ultimately pitted the company’s two founders against each other as Olsen steadfastly refused to implement a rigid hierarchy, while Harlan Anderson backed Jay Forrester, the Whirlwind project leader turned MIT Sloan School of Business professor who served as a director of DEC, in his efforts to implement some of his own management theories at the company. Georges Doriot, the most important director of the company due to ARD’s large stake in DEC, remained a staunch supporter of and adviser to Olsen, but preferred to stay out of the conflict, feeling directors should not tell management what to do unless a company is in dire straits.

While struggling to operate efficiently, DEC also experienced difficulty creating a successor to the PDP-1. Initial plans to create 24- and 36-bit versions of the computer, designated the PDP-2 and PDP-3 respectively, floundered due to technical hurdles and a lack of customer interest and never entered production. Worse, PDP-1 designer Ben Gurley announced his resignation in December 1962 to join a new startup before being tragically murdered less than a year later by a former co-worker. With Gurley’s departure, DEC’s primary computer designer became a young engineer named Gordon Bell.

Born in Kirksville, Missouri, Gordon Bell exhibited an aptitude for electrical engineering at an early age and was earning $6/hour as an electrician by the time he was about twelve years old. Matriculating to MIT in 1952, Bell earned his B.S. in electrical engineering from the school in 1956 and his M.S. in the same field the next year. Originally interested in being a power engineer, Bell worked for American Electric Power and GE through a co-op program while attending MIT, but he ultimately decided not to pursue that path further. Unsure what to do after graduation, he accepted an offer to travel to Australia to set up a new computer lab in the electrical engineering department of the University of New South Wales. After a brief stint in the Speech Computation Laboratory at MIT, Bell Joined DEC in 1960 and did some work on the I/O subsystem of the PDP-1. After helping with the aborted PDP-3, which had been an attempt to enter the scientific market served by the 36-bit IBM 7090, Bell initiated a project to create a cheaper, but more limited version of the PDP-1 intended for process control. Dubbed the PDP-4, the computer sold for just $65,000 and included some updated features such as auto index registers, but a lack of compatibility with the PDP-1 coupled with reduced capabilities compared to DEC’s original computer ultimately killed interest in the product. While DEC managed to sell fifty-four PDP-4s, one more unit than the PDP-1, it was considered a commercial disappointment.

In early 1963, Olsen and Anderson decided to return to the PDP-3 concept of a large scientific computer that could challenge IBM in the mainframe space and tapped Bell for the project, who was assisted by Alan Kotok, the noted MIT hacker who joined DEC upon graduating in 1962. Dubbed the PDP-6, Bell’s computer was capable of performing 250,000 operations per second and came equipped with a core memory with a capacity of 32,768 36-bit words. While not quite on par with the industry-leading IBM 7094, the computer was capable of real-time operation and incorporated native support for time sharing unlike the IBM model, and it was also far cheaper, retailing for just $300,000. Unfortunately, the computer was poorly engineered and not thoroughly tested, leading to serious technical defects only discovered once the first computers began shipping to customers in 1964. As a result, the computer turned out to be a disaster, with only twenty-three units sold. Harlan Anderson, who had championed the computer heavily, bore the brunt of the blame for its failure from his co-founder Olsen. Combined with their on-going fight over the future direction of the company, the stigma of the PDP-6 fiasco ultimately drove Anderson from the company in 1966. The failure of the PDP-6 was the clearest indicator yet that DEC needed to reform its corporate structure to survive.

In 1965, Olsen finally hit upon a solution to the company’s organizational woes. Rather than a divisional structure, Olsen reorganized DEC along product lines. Each computer sold by the company, along with the company’s module and memory test equipment lines, would become its own business unit run by a single senior executive with full profit and loss responsibility and complete independence to define, develop, and market his product as he saw fit. To actually execute their visions, each of these senior executives would have to present his plans to a central Operations Committee composed of Olsen and his most trusted managers, where they would bid for resources from the company’s functional units such as sales, manufacturing, and marketing. In effect, each project manager became an entrepreneur and the functional managers became investors, allocating their resources based on which projects the Operations Committee felt deserved the most backing. While DEC was not the first company to try this interconnected corporate structure — which soon gained the moniker “matrix management” — the ensuing financial success of DEC caused the matrix to become closely associated with Ken Olsen in subsequent decades.

The Minicomputer

The PDP-8, the first widely sold minicomputer

One of DEC’s oldest computer customers was Atomic Energy of Canada, which had purchased one of the first PDP-1 computers for its Chalk River facility. The company proceeded to buy a PDP-4 to control the reactor at Chalk River, but the computer was not quite able to handle all the duties it had been assigned. To solve this problem, Gordon Bell proposed in early 1963 that rather than create custom circuitry to meet Atomic Energy’s needs, DEC should build a smaller computer that could serve as a front end to interface with the PDP-4 and provide the needed functionality. Rather than just create a system limited to Atomic Energy’s needs, however, Bell decided to design the machine so it could also function as an independent general-purpose computer. DEC named this new computer the PDP-5.

Bell was not the first person to create a small front-end computer: in 1960 Control Data released the Seymour Cray-designed CDC 160 to serve as an I/O device to interface with its 1604 mainframe. Soon after, CDC repurposed the machine as a stand-alone device and marketed it as the CDC 160A. The brilliant Cray employed bank switching and other techniques to allow the relatively limited 12-bit computer to address almost as much memory as a large mainframe, though not as easily or efficiently. While not as powerful as a full-scale mainframe, the 160A provided most of the same functionality — albeit scaled down at a speed of only 67,000 operations per second — at a price of only $60,000 and a footprint the size of a metal desk. CDC experienced some success with the 160A, but as the company was primarily focused on supercomputers, it paid little attention to the low-end market.

While Bell planned for the 12-bit PDP-5 to be a general purpose computer, DEC essentially treated the computer as a custom solution for Atomic Energy and not as a key part of its future product line, which was then focused around the large-scale PDP-6. As a result, DEC planned to only sell roughly ten computers, just enough to recoup its development costs. Just as IBM had underestimated demand for the relatively cheap 1401, however, DEC did not realized how interested the market would be in a fully functional computer that sold for just $27,000, by far the cheapest core-memory computer on the market. Orders soon began pouring in, and the company ultimately sold roughly 1,000 PDP-5s, making it the company’s best-selling computer by a factor of twenty. With the PDP-6 floundering, Ken Olsen decided to champion smaller computers, and the company began considering a more advanced followup to the PDP-5.

Edson de Castro, the engineer who designed the PDP-8 and later established Data General

Just as Harlan Anderson was forced out of DEC due to the failure of the PDP-6, so too did Gordon Bell decide it was time to move on. While he did not officially leave the company, he took a sabbatical in 1966 that lasted six years in which he did some work in academia and continued to serve as a DEC consultant. In his place, the task of developing a followup to the PDP-5 fell to another engineer named Edson de Castro.

Born in Plainfield, New Jersey, Ed de Castro spent the majority of his childhood in Newton, Massachusetts. The son of a chemical engineer, de Castro had a fascination with mechanical devices from a young age and always knew he wanted to be an engineer. Accepted into MIT, de Castro opted instead to attend the much smaller and less prestigious Lowell Technological Institute, where he felt he would receive more attention from the school faculty. Interested in business, de Castro applied to Harvard Business School after graduation, but the school said it would only accept him after the next academic year. He therefore needed a job in the short term and was recruited by Stan Olsen as a systems engineer for DEC in late 1960, where he worked with customers to develop applications for DEC’s systems modules. After just under a year at DEC, de Castro left to attend Harvard, but his grades were insufficient to qualify for the second year of the program, so he returned to DEC to work in the custom products division, which focused on memory test equipment.

After Gordon Bell and Alan Kotok outlined the PDP-5, de Castro became the primary engineer responsible for building it. The original design called for the machine to be a 10-bit computer, but de Castro upped this to 12 bits — multiples of 6 being the standard in the industry at the time — so it could address more memory and be more useful. When the PDP-5 became successful, de Castro went back to working as a systems engineer and helped install the computers in the field. Soon after, he turned his attention to the computer’s successor, the PDP-8.

The PDP-8 had several advantages over the small computers that preceded it. First of all, it used a transistor from Philco, the germanium micro-alloy diffused transistor, that operated particularly quickly and allowed the computer to perform 500,000 operations per second. Furthermore, DEC harnessed its expertise in core memory to lower the memory cycle time to 1.6 microseconds, slightly faster than an IBM 7090 and much faster than the CDC 160A. While the 12-bit computer could only directly address 7 bits of memory, DEC employed several techniques to allow the computer to indirectly address full 12-bit words and perform virtually any operation a larger computer could, albeit sometimes much slower. While complex calculations might take a long time, however, many simpler operations could be performed just as quickly on a PDP-8 as on a much larger and more expensive computer. The PDP-8 was also incredibly small, as de Castro employed an especially efficient board design that allowed the entire computer to fit into a case that occupied only eight cubic feet of volume, meaning it was small enough to place on top of a standard workbench.

In 1965, DEC introduced the PDP-8 with 4,000 words of memory and a teletype for user input for just $18,000. Within just a few years, the price fell to under $10,000 as DEC continued to cost reduce the computer though new technologies like integrated circuits, which were first used in the PDP-8 in 1969. Thanks to de Castro, organizations could now purchase a computer that fit on top of a desk yet provided nearly all the same functionality at nearly the same speed (for most operations, at least) as a million dollar computer taking up half a room. The limitations of the PDP-8 guaranteed it would not displace mainframes entirely, but the low price helped it become a massive success with over 50,000 units sold over a fifteen year period. Many of these machines were sold under a new business model in which DEC would act as an original equipment manufacturer (OEM) by selling a PDP-8 to another company that would add its own software and peripheral hardware. This company would then sell the package under its own name and take responsibility for service and maintenance. Before long, OEM arrangements grew to represent fifty percent of DEC’s computer sales while allowing DEC to keep its costs down by farming out labor intensive tasks like software creation. As DEC rode the success of the PDP-8, revenues climbed from $15 million in 1965 to almost $23 million in 1966 to $39 million in 1967, while profits increased sixfold between 1965 and 1967 to $4.5 million.

The Nova

The Data General Nova, a minicomputer that combined an incredibly small size with an incredibly cheap price

The success of the PDP-8 opened up a whole new market for small, cheap machines that soon gained the designation “minicomputers.” With IBM and most of its competitors remaining focused on full-sized mainframes, however, this market was largely populated by newcomers to the computer industry. Hewlett-Packard, the large West Coast electronics firm, first offered to buy DEC and then went into competition with its own minicomputer line. Another west-coast electronics firm, Varian Associates, also entered the fray, as did an array of start-ups like Wang Laboratories and Computer Control Company, which was quickly purchased by Honeywell. By 1970, over seventy companies were manufacturing minicomputers, and a thriving high-technology sector had emerged along Route 128 in the suburbs of Boston. DEC continued to be the leader in the field, but soon faced some of its most serious competition from within the company itself.

Ed de Castro had brought great success to DEC by designing the PDP-8, but he was not particularly happy at the company. The Silicon Valley concept of rewarding engineering talent with generous stock options did not yet exist, so while DEC had gone public in 1966, only senior executives reaped the benefits while de Castro, for all the value he added to the company, had to make do with an engineer’s salary of around $12,000 a year. Furthermore, de Castro had hoped to be placed in charge of the PDP-8 product line, but Ken Olsen refused him. Sensing de Castro was unhappy and not wanting to lose such a talent, DEC executive Nick Mazzarese hoped to placate de Castro by giving him charge of a new project to define the company’s next-generation successor to the PDP-8.

Although the PDP-8 was only two years old by the time de Castro turned to designing a followup in 1967, the computer market had changed drastically. The integrated circuit was by now well established and promised significant increases in performance alongside simultaneous reductions in size and cost. Furthermore, the dominance of the System/360 had caused a shift from a computer architecture based on multiples of six bits to one based on multiples of the 8-bit byte, which remains the standard in the computer industry to this day. DEC’s competitors in the minicomputer space were therefore focusing on creating 16-bit machines, and the 12-bit PDP-8 looked increasingly obsolete in comparison.

In late 1967, de Castro and fellow engineers Henry Burkhardt and Dick Sogge unveiled an ambitious computer architecture designed to keep DEC on top of the minicomputer market well into the 1970s. Dubbed the PDP-X, de Castro’s system was built around medium-scale integration circuits and — like the System/360 — would offer a range of power and price options all enjoying software and peripheral compatibility. Furthermore, while the base architecture would be 16-bit, the PDP-X was designed to be easily configurable for 32-bit technology, allowing customers to upgrade as their needs grew over time without having to redo all their software or buy all new hardware. Rather than being just a replacement for the PDP-8, the PDP-X was positioned as a product that could supplant DEC’s entire existing computer line.

But the PDP-X was too ambitious for DEC. Olsen still remembered the failure of the PDP-6 project, and he was horrified when de Castro told him that the PDP-X would be an even bigger undertaking than that computer. Worse, de Castro was known for bucking DEC management practices and doing things his own way, so he had butted heads with nearly everyone on the company’s Operations Committee while simultaneously alienating nearly every product line manager by proposing to replace all of their products. Unlike Tom Watson Jr., who bet his company on an integrated product line and came to dominate the mainframe industry as a result, Olsen could not bring himself to pledge so many resources to a single project. DEC turned the PDP-X down.

This was the last straw for de Castro. He had long been interested in business — witness his brief stint at Harvard — and he had long chafed under DEC management. He had also toyed with the idea of establishing his own company in the past, and with the Route 128 tech corridor taking off, there was plenty of venture money to be had for a computer startup. Therefore, de Castro brought in his former boss in custom products, Pat Greene, to run his prospective company and a Fairchild salesman named Herb Richman that he had purchased circuits from to run marketing and began designing a new 8-bit computer with Burkhardt and Sogge before actually leaving DEC. After initially garnering little interest from venture capitalists, Richman placed de Castro in touch with George Cogar, co-founder of a company called Mohawk Data Sciences, who agreed to become the lead investor in what turned out to be $800,000 in financing.

In early 1968, the group was finally ready to leave DEC, but Pat Greene got cold feet and appeared ready to back out, uncomfortable with the work the group was doing behind Ken Olsen’s back. Therefore, de Castro, Burkhardt, and Sogge waited until April 15, when Greene was out of the country on a business trip to Japan, to resign and officially establish Data General. When Greene returned from Japan, he turned over all materials he had related to the new company to Olsen, including the plans for the 8-bit computer the three engineers had been secretly building at DEC. Olsen felt betrayed and carried an enmity for Data General for decades, convinced de Castro had stolen DEC technology when he departed. Despite this belief, however, DEC never sued.

In 1969, de Castro, Burkhardt, and Sogge released their first computer, the Data General Nova. Quickly abandoning their 8-bit plans once leaving DEC, the trio designed the Nova using medium-scale integration circuits so that the entire computer fit on just two printed circuit boards: one containing the 16-bit CPU and the other containing various support systems. By fitting all the circuitry on only two boards with minimal wiring, Data General was able to significantly undercut the PDP-8 on cost while simultaneously making the system easier to manufacture and therefore more reliable. With these savings, Data General was able to offer the Nova at the extremely low price of $3,995, though practically speaking, the computer was essentially useless without also buying a 4K core memory expansion, which pushed the price up to around $7,995. Still this was an unheard of price for a fully functional computer and spurred brisk sales. It also piqued the interest of a young engineer recently graduated from the University of Utah who thought it just might be possible to use the Nova to introduce the Spacewar! game so popular in certain university computer labs to the wider world.